Helder Mello Guimaraes is an independent investment consultant. A graduate of the ICMA Centre in Reading (UK), since 2001 he has worked in financial markets in various capacities: as a technical analyst, portfolio manager, trading system developer, and as a consultant. He frequently combines fundamental, technical, and statistical analyses to identify opportunities and formulate investment strategies in the main asset classes. A Brazilian citizen born in France, he speaks English, Portuguese, French, Spanish and some Italian.

A short-term bounce in the US dollar, which suggests gold may continue to consolidate for the time being, should provide interesting entry points for those looking to profit from the resumption of the longer-term rally in the precious metal.

After posting a solid performance over the summer, gold is on the verge of testing what can be considered major technical resistance around $1378. The precious metal may be about to get its shine back in a big way, as a number of significant technical developments suggest a strong potential for the resumption of the bullish medium- and long-term trend.

The “normalization” of monetary policy, while plausible, may turn out to be a misnomer or even a pipe dream without much stronger growth and inflation. In their absence, long-term global bond yields are likely to remain below what would be considered “normal” in previous cycles, and downward pressure on gold prices likely weaker than in the past.

Since January 1999, when LBMA prices traded at 250.90 in euros, gold has seen a compound annual growth rate of some 8.7% compared to 5.4% for the DAX, 1.5% for the CAC 40 and around 0.15% on the Eurostoxx 50, using monthly data and closing prices from May 31.

The very real prospect of negative equity returns over the next decade alone provides a compelling case for using gold as a hedge, and investors seeking capital preservation may wish to include the metal in their asset allocation.

Over the past few weeks several political and geopolitical factors goaded safe haven assets higher, providing a particularly positive environment for gold and helping to push it past this fairly important resistance.